In a glassed-in boardroom in the centre of the space, one of Vidyard’s founders, Michael Litt, is finishing up a meeting with investors; since its founding in 2010, Vidyard has raised about $8.5 million.
“Welcome,” he says as he emerges from the room and extends his hand—but I’m not quite sure how to get up gracefully from the damned, nearly beanless beanbag. Litt is wearing a lilac shirt, its French cuffs turned up to reveal the different pattern inside, and sports a tidy beard. Living in San Francisco, the epicentre of the tech revolution, I know the look all too well: The 26-year-old has got the hipster-dandy happening, de rigueur for the founder of a tech company.
Vidyard sells software that helps companies figure out which parts of their online videos viewers are watching, what they’re rewatching, which parts they fast-forward through or where they pause, having lost interest. “The idea is that this information is useful, particularly to sales teams, to know what interests their clients, and possible clients, and what doesn’t,” says Litt.
The University of Waterloo engineering grad anticipates he’ll need to almost double Vidyard’s staff to over 50 by the end of the year to keep up with a growing roster of blue-chip customers, including Eloqua, Salesforce.com and McAfee. “We’re in the phase of stepping on the gas, but it wasn’t a sure thing,” Litt says, sipping a microbrew from Vidyard’s mainly beer-filled fridge. “There were lots of moments where it could have all gone wrong. And it still can—in a moment.”
Litt and his co-founder, Devon Galloway, met at Waterloo, and both turned down sweet job offers—Litt at Google’s Zurich office, Galloway at the international powerhouse McKinsey—to start Vidyard. “My dad was terminally ill and he lived locally, so that was one big reason to stay here,” Litt says. (His father died this past spring.) “And we’d worked on this project in our final year at Waterloo—like an interdisciplinary thesis.” In it, they proposed an efficient way of making slick instructional videos, charging $80,000 a pop. “Our clients were much more interested in the analytics platform that went with the videos, so we took that idea and ran with it,” he says. In the start-up jargon that has entered everyday speech, at least in these circles, they “pivoted.”
Over by the water cooler, Litt shows me a photo of Vidyard’s patron saint: the English-born venture capitalist, Silicon Valley guru and renaissance man Paul Graham (PG, to everyone who’s anyone). Graham runs the Wimbledon of start-up crucibles in the Valley, Y Combinator. It’s an intensive three-month course that helps founders transform their ideas into viable business plans and, if they impress PG and his pals, obtain some funding (in exchange for a chunk of equity). Only 3% of the start-ups that apply from around the world are admitted, and Vidyard emerged in September, 2011, with a playbook and $1.65 million in seed funding.
“When we drove back here from San Francisco,” says Litt, “we thought—excuse me—but we thought, ‘What the fuck are we going to do with all this money?’” They took some time to refine the software and find customers. “We were in what PG calls the Trough of Sorrow. I was working to close deals for, oh, $250 per month, and I was pretending it’d all be okay. We’d had our Crash of Ineptitude—another PG term for when you shit the bed—and we’d come back from that, and the product was now good.” In November, 2012, they drove to Orlando for an Eloqua conference, their entire car an advertisement for Vidyard, and landed $50,000 in new business. By Christmas Eve, they’d closed a Series A round of funding for $7 million.
After our interview, we slide in to Litt’s silver Porsche convertible so he can show me Vidyard’s former office, in a spooky, old house. “This car was something that came from a lucky investment in real estate,” he says hastily, knowing that investors prefer start-up founders to live on Ramen noodles until the business really takes off.
As he drops me at my own, less flashy, ride, Litt turns serious—the inveterate salesman making one last pitch: “They say the future of the Internet is television. At present, 57% of consumer traffic is driven by video, and by 2017, some estimates peg it at 92%. That’s where we are, what we want to participate in.”